Why is Row Overflow not working on SQL Server 2005

I have a SQL Server 2005 database with a table that has around 860 columns. Aside from the ID column all other columns are varchar(N) where N is either 100 or 500. Upon inserting a new row (via an InfoPath form as the front end) with more than 8000 characters the SQL server returns the following error:

Cannot create a row of size 11024 which is greater than the allowable maximum of 8060.

From what I understand this should not be happening due to Row Overflow.

Can anyone please provide some insight as to why this is happening?

This is just a warning message. You can verify that rows are overflowing to the ROW_OVERFLOW_DATA pages by using the undocumented command DBCC IND.

Personally this sounds like a table which could stand some normalization.

StackExchange Database Administrators Q#4736, answer score: 4